The purpose of reconciliation is to get your records to match your monthly bank statement.
If you record accurately every transaction and the bank makes no errors, your registers will match the bank statement most of the time.
My statements usually don't match because;
1. I sometimes forget to enter an autowithdrawal transaction,
2. My pay is deposited automatically,
3. Every quarter there are interest deposits,
4. I belong to several on-line services that bill electronically (automatic withdrawals),
5. On occasion the bank makes an error (usually they misinterpret a number on a check, 4/9 or 1/7, this has happened to me twice).
To reconcile a register automatically is done exactly the same way you do it manually except it is generally easier, faster, more accurate and eliminates most of the calculations needed to solve discrepancies.
Your bank statement will include one section for each cash account you have with the bank. The first one is usually the checking account followed by the saving account. I suggest that you reconcile them in the same order as they appear on the bank statement.
To reconcile you need to get all the needed documents together, bank statement, register books and transaction receipts (from ATMs and tellers).
The following is an example of reconciling the tutorial data base with a simple bank statement.
If you haven't done so, open the Tutorial Data Base.
In the display view select:
Cash account: Checking.
Budget account: ALL ACCOUNTS.
Uncheck Comments.
Bank Statement, Date: February 28, 1993
Your Standard Checking Account
Beginning Balance on 01/28/93 $3370.00
Total Deposits/Withdrawals -503.02
Ending Balance $2866.98
Checks Paid:
Date Paid Number Amount
02/05 1560 $ 360.80
02/12 1561 185.13
Total of 2 checks paid $ 545.93
Account Activity:
Date
Posted Description Amount
Deposits and Credits
02/08 Payroll Gte Govt Sys $567.78
02/15 Qrt Payment *Stocks To Go* 35.13
Total Deposits and Credits $602.91
Withdrawals and Transfers
02/01 Cash Withdrawal 01/31 $80.00
02/08 Transfer to savings 02/07 400.00
02/16 Cash Withdrawal 02/15 80.00
Total Withdrawals and Transfers $560.00
Your Regular Savings Account
Beginning Balance on 01/28/93 $1444.89
Total Deposits/Withdrawals 403.53
Ending Balance $1848.42
Account Activity:
Date
Posted Description Amount
Deposits and Credits
02/08 Transfer from checking 02/07 $400.00
02/28 Interest 3.53
Total Deposits and Credits $403.53
Balancing the checking account.
Step 1: Select the Reconcile function.
Step 2: Select the bank statements month (Feb).
Step 3: Click the Reconcile button.
Step 4: Enter the bank statement date in the cleared field of every data base entry that matches an entry on the bank statement. If a data base entry doesn't appear or is incorrect, then click the Skip button.
Every entry that matches, place a check mark next to the reference on the bank statement.
The checking account entries that should match are: 5, 6, 8, 9,10
Entries to skip:
1 Already cleared (last statement).
3 Already cleared (last statement).
4 Doesn't match (difference of 80 cents).
11 Not on the bank statement.
There should now be two checking account entries on the bank statement that are not checked off. An autowithdrawal of $80 and the February rent payment that shows an error of 80 cents.
To repeat, your job is to reconcile your account whether entries are right or wrong.
Step 5: Enter the bank statement date in the cleared field of the February rent entry ( entry 4).
Step 6: Click the Done button.
Step 7: Select the Edit function.
Step 8: Click the Add button.
Step 9: Add a correction entry. As an example:
Budget Account: Rent
Cash Account: Checking (should default to this)
Post Date: 1/30 (The post date of the entry being corrected).
Name: Reconcile Correction
Comment: Rent Feb
Check #: 0
Cleared: 2/28
Amount: .80
Step 10: Add the autowithdrawal entry. Budget account should be, Misc.
The Cleared entry in the register (bottom of the Balance column) should now match the bank statement ending balance for the checking account.
Balancing the savings account.
Step 1: Select the Display function.
Step 2: Select the cash account, Savings.
Step 3: Select the Reconcile function.
Step 4: Select the bank statements month (Feb).
Step 5: Click the Reconcile button.
Step 6: Enter the bank statement date in the cleared field of every data base entry that matches an entry on the bank statement. If a data base entry doesn't appear or is incorrect, then click the Skip button.
Every entry that matches, place a check mark next to the reference on the bank statement.
The savings account entries that should match are: 7
Entries to skip:
2 Already cleared (last statement).
There should now be one savings account entry on the bank statement that is not checked off, an interest deposit of $3.53.
Step 7: Click the Done button.
Step 8: Select the Edit function.
Step 9: Click the Add button.
Step 10: Add the interest entry. Budget account should be, Savings Interest.
The Cleared entry in the register (bottom of the Balance column) should now match the bank statement ending balance for the checking account.
Saving the Data Base.
For the tutorial you do not need to save the reconciled data base. But during real use, I advise saving your changes anytime you feel that you would not want to repeat what you have done since the last save (saving often is best for any application).
